2 ASX dividend shares for steady income in retirement

These 2 ASX dividend shares are known for paying steady income and could be options for retirement, including Rural Funds Group (ASX:RFF).
The post 2 ASX dividend shares for steady income in retirement appeared first on The Motley Fool Australia. –

Retired couple

There are some ASX dividend shares that are paying steady, and growing, income to shareholders each year.

Some businesses cut their dividends in the 2020 calendar year such as Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP) and Transurban Group (ASX: TCL).

However, these two ASX dividend shares have continued increasing:

Rural Funds Group (ASX: RFF)

Rural Funds is an agricultural real estate investment trust (REIT) that owns a diversified farm portfolio.

A core aim for the management of Rural Funds is to grow the distribution by 4% per annum for investors.

It has grown the distribution by that 4% per annum since it listed several years ago. In increased its distribution during the COVID-19-affected 2020 year like clockwork. In FY21 it’s expecting to grow the distribution to 11.28 cents per unit.

The ASX dividend share is invested across different sectors like cattle, almonds and vineyards. The business is regularly looking for other investments to diversify the portfolio further. It used to own poultry assets, but it sold those as there wasn’t much capital growth potential.

Rural Funds has rental indexation built into all of its contracts. That rental growth is linked either to a fixed 2.5% annual increase, or it’s linked to CPI inflation, plus occasional market reviews.

The farmland REIT is on the lookout for assets that it can invest in and improve the productivity. For example, with some cattle properties it has improved them with water points and pasture improvements, while at its cropping properties it has added water storage and irrigated cropping.

One of the features of this ASX dividend share is that it has a long weighted average lease expiry (WALE). At the last update its WALE was approximately 11 years.

At the current Rural Funds share price it has a FY21 distribution yield of 4.5%

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Also known as Soul Patts, this ASX share has the longest consecutive dividend growth streak on the ASX. It has grown its dividend every year since 2000.

It has been increasing its dividend each year by 2 cents per share for almost a decade. Another increase of 2 cents per share in FY21 would represent an increase of 3.3% to 62 cents per share.

These dividend increases by Soul Patts are funded by the dividends paid to it from its investment portfolio.

There are some key businesses in the portfolio that pay most of the dividend income such as TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Milton Corporation Limited (ASX: MLT), Bki Investment Co Ltd (ASX: BKI) and Australian Pharmaceutical Industries Ltd (ASX: API).

Aside from the above names, the ASX dividend share also has other listed businesses which make up a sizeable portion of the portfolio like Apex Healthcare, Tuas Ltd (ASX: TUA) and Clover Corporation Limited (ASX: CLV).

Soul Patts also has a portfolio of unlisted businesses in different sectors like agriculture, financial services, resources, swimming schools and electrical engineering and control systems (Ampcontrol).

The ASX dividend share has long-term employees. More than 40 employees have worked for the company for over 50 years. Five generations of the Pattinson family have served the company, as have three generations of the Dixson, Spence, Rowe and Letters families.

At the current Soul Patts share price, a FY21 dividend of 62 cents per share would equate to a dividend yield of 3.1%.

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Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Clover Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 2 ASX dividend shares for steady income in retirement appeared first on The Motley Fool Australia.

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